Opinion · Court of Appeals for the Federal Circuit
Australian Therapeutic v. Naked Tm, LLC
981 F.3d 1083
- Type
- Opinion
- Court
- Court of Appeals for the Federal Circuit
- Jurisdiction
- Federal
- Date
- 2020-12-04
- Topic
- general
suggesting in the trademark context that Alps remains good law even after 19 Schwendimann
Citator
- Authority status
- pending
- Cited by
- 5 opinions
Case: 19-1567 Document: 65 Page: 1 Filed: 12/04/2020
United States Court of Appeals
for the Federal Circuit
______________________
AUSTRALIAN THERAPEUTIC SUPPLIES PTY.
LTD.,
Appellant
v.
NAKED TM, LLC,
Appellee
______________________
2019-1567
______________________
Appeal from the United States Patent and Trademark
Office, Trademark Trial and Appeal Board in No.
92056381.
______________________
ON PETITION FOR REHEARING EN BANC
______________________
SUZANNE D. MEEHLE, Meehle & Jay PA, Orlando, FL,
filed a petition for rehearing en banc for appellee. Also rep-
resented by EMILY BEHZADI, DAVEY T. JAY; TANIA
WILLIAMS, The Williams Firm, P.A., West Palm Beach, FL.
JAMES ROBERT MENKER, Holley & Menker, P.A., Atlan-
tic Beach, FL, filed a response to the petition for appellant.
CHARLES L. THOMASON, Thomason Law Office, Louis-
ville, KY, amicus curiae, pro se.
Case: 19-1567 Document: 65 Page: 2 Filed: 12/04/2020
2 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC
______________________
Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,
MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN,
HUGHES, and STOLL, Circuit Judges.
WALLACH, Circuit Judge, dissents from the denial of the pe-
tition for rehearing en banc.
PER CURIAM.
ORDER
Appellee Naked TM, LLC filed a petition for rehearing
en banc. A response to the petition was invited by the court
and filed by Appellant Australian Therapeutic Supplies
Pty. Ltd. A motion for leave to file an amicus brief was filed
by Lee Thomason and granted by the court. The petition
for rehearing, response, and amicus brief were first re-
ferred to the panel that heard the appeal, and thereafter,
to the circuit judges who are in regular active service. A
poll was requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT:
The petition for panel rehearing is denied.
The petition for rehearing en banc is denied.
The mandate of the court will issue on December 11,
2020.
FOR THE COURT
December 4, 2020 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court
Case: 19-1567 Document: 65 Page: 3 Filed: 12/04/2020
United States Court of Appeals
for the Federal Circuit
______________________
AUSTRALIAN THERAPEUTIC SUPPLIES PTY.
LTD.,
Appellant
v.
NAKED TM, LLC,
Appellee
______________________
2019-1567
______________________
Appeal from the United States Patent and Trademark
Office, Trademark Trial and Appeal Board in No.
92056381.
______________________
WALLACH, Circuit Judge, dissenting from denial of a peti-
tion for rehearing en banc.
I write to express my disagreement with the merits of
the decision in Australian Therapeutic Supplies Pty. Ltd. v.
Naked TM, LLC (Australian III), 965 F.3d 1370
(Fed. Cir. 2020), and to note a potential point of confusion in our case law going forward. Statutory standing is a question of “whether a legislatively conferred cause of action encom- passes a particular plaintiff’s claim.” Lexmark Int’l, Inc. v. Case: 19-1567 Document: 65 Page: 4 Filed: 12/04/2020 2 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC Static Control Components, Inc.,572 U.S. 118, 127
(2014). 1 A cause of action “extends only to plaintiffs whose interests fall within the zone of interests protected by the law in- voked.”Id. at 129
(internal quotation marks and citation omitted). Australian III concerns how broad the “zone of interests” is for 15 U.S.C. § 1064—specifically, whether a prior settlement agreement may preclude a petitioner from establishing a valid cause of action. Compare Australian III, 965 F.3d at 1374–76 (concluding that a petitioner had a valid cause of action because “proprietary rights” are not required), with Australian III, 965 F.3d at 1376–81 (Wal- lach, J. dissenting) (concluding that a petitioner did not have a valid cause of action because it was precluded by a prior settlement agreement). See15 U.S.C. § 1064
(provid-
ing for cancellation of registration of a trademark).
1 There is some variation, evidenced in our recent ju-
risprudence and the briefing here, as to whether this in-
quiry, formerly an issue of “prudential standing,” is called
“statutory standing” or, alternatively, a “cause of action”
requirement. In Lexmark, the Supreme Court noted that
it has “on occasion referred to this inquiry as ‘statutory
standing,’” and, while the term is “an improvement over
the language of ‘prudential standing,’ since it correctly
places the focus on the statute,” it is imperfect since
whether a plaintiff has “a valid . . . cause of action does not
implicate subject-matter jurisdiction[.]” Lexmark, 572 U.S. at 128
n.4. Following Lexmark, the Supreme Court has identified this inquiry as one of “statutory standing” or a “cause of action” requirement. See, e.g., Bank of Am. Corp. v. City of Miami, Fla.,137 S. Ct. 1296
, 1302–05 (2017) (referring to “statutory” standing, “prudential standing,” and “the ‘cause-of-action’ . . . requirement”). Both terms stand for the same inquiry, i.e., “whether a leg- islatively conferred cause of action encompasses a particu- lar plaintiff’s claim.” Lexmark,572 U.S. at 127
.
Case: 19-1567 Document: 65 Page: 5 Filed: 12/04/2020
AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 3
Australian III: (1) conflicts with our case law requiring
a “legitimate commercial interest” to have a valid cause of
action under 15 U.S.C. § 1064
, see Empresa Cubana Del Tabaco v. Gen. Cigar Co.,753 F.3d 1270, 1274
(Fed. Cir. 2014) (following Lexmark, noting that a petitioner must have a “legitimate commercial interest sufficient to confer standing”); (2) undermines our case law favoring the enforcement of settlement agreements, see Wells Cargo, Inc. v. Wells Cargo, Inc.,606 F.2d 961, 965
(C.C.P.A. 1979) (“If there [is] a policy favoring challenges to trademark va- lidity, it too has been viewed as outweighed by the policy favoring settlements.”); and (3) raises questions as to the impact of Supreme Court precedent on our statutory stand- ing jurisprudence, see Lexmark,572 U.S. at 128
n.4 (noting
that statutory standing does not implicate Article III sub-
ject matter jurisdiction), 134 (providing “a direct applica-
tion of the zone-of-interests test and the proximate-cause
requirement [to] suppl[y] the relevant limits on who may
sue”). Accordingly, I respectfully dissent from our denial of
rehearing en banc. See FED. R. APP. P. 35(a)(1)–(2).
BACKGROUND
I. Legal Framework
Statutory standing is a question of “whether a legisla-
tively conferred cause of action encompasses a particular
plaintiff’s claim.” Lexmark, 572 U.S. at 127
. 2 A cause of action “extends only to plaintiffs whose interests fall within the zone of interests protected by the law invoked.”Id. at 129
(internal quotation marks and citation omitted).
Under the relevant statute, “a direct application of the
zone-of-interests test and the proximate-cause
2 Lexmark concerned another Lanham Act provision,
specifically 15 U.S.C. § 1125
(a). Lexmark,572 U.S. at 134
(citing15 U.S.C. § 1125
(a)); see15 U.S.C. § 1125
(a) (provid- ing for a cause of action for false advertising). Case: 19-1567 Document: 65 Page: 6 Filed: 12/04/2020 4 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC requirement supplies the relevant limits on who may sue.”Id. at 134
. “[T]he breadth of the zone of interests varies according to the provisions of law at issue[.]”Id. at 130
. 3
Relevant here, “[a] petition to cancel a registration of a
mark . . . may . . . be filed . . . by any person who believes
that he is or will be damaged . . . by the registration of a
mark[.]” 15 U.S.C. § 1064
. In Empresa Cubana, we ex- plained that, in keeping with Lexmark, we must “focus[] on [a petitioner’s] entitlement to the cause of action defined by15 U.S.C. § 1064
,” Empresa Cubana,753 F.3d at 1274
, and confirmed the continued applicability of our pre-Lexmark15 U.S.C. § 1064
jurisprudence to determine whether “[a] petitioner is authorized by statute to seek cancellation of a mark,”id. at 1275
. Under Empresa Cubana, a petitioner
must show that “it has both a real interest in the proceed-
ings . . . [and] a reasonable basis for its belief of damage” to
3 For example, “in the [Administrative Procedure
Act (‘APA’)] context . . . the test is not ‘especially demand-
ing,’” as a “lenient approach is an appropriate means of pre-
serving the flexibility of the APA’s omnibus judicial-review
provision.” Id.
(quoting Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak,567 U.S. 209, 225
(2012)). What satisfies “the ‘generous review provisions’ of the APA,” however, “may not [be enough] for other” stat- utes.Id.
(quoting Bennett v. Spear,520 U.S. 154, 163
(1997)). For the Lanham Act, while its often “broad lan- guage might suggest that an action is available to anyone who can satisfy the minimum requirements of Article III,” the Supreme Court considered it “unlikel[y] that Congress meant” for the Lanham Act to “get such an expansive read- ing,” Lexmark,572 U.S. at 129
(internal quotation marks and citation omitted), and instead looked to the “unusual, and extraordinarily helpful, detailed statement of the [Lanham Act’s] purposes” as codified at15 U.S.C. § 1127
,”id. at 131
(internal quotation marks and citation omitted). Case: 19-1567 Document: 65 Page: 7 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 5 have a valid cause of action under15 U.S.C. § 1064
.Id.
(internal quotation marks and citation omitted); see Aus- tralian III, 965 F.3d at 1373–74 (similar). Recently, we clarified both that “the Lexmark analytical framework is the applicable standard for determining whether a person is eligible under15 U.S.C. § 1064
to bring a petition for the cancellation of a trademark registration,” and that there is “no meaningful, substantive difference between the analyt- ical frameworks expressed in Lexmark and Empresa Cubana.” Corcamore, LLC v. SFM, LLC, No. 2019-1526,2020 WL 6277728
, at *3 (Fed. Cir. Oct. 27, 2020); seeid. at *5
(explaining that “[t]he zone-of-interests requirement
and the real-interest requirement share a similar purpose
and application” and “a party that demonstrates a reason-
able belief of damage by the registration of a trademark
demonstrates proximate causation within the context of
[15 U.S.C.] § 1064”). 4
4 Since Empresa Cubana, this court has continued to
apply our pre-Lexmark case law to satisfy Lexmark’s stat-
utory zone-of-interests test. See, e.g., Kaszuba v.
Iancu, 823 F. App’x 973
, 978 (Fed. Cir. 2020); Bank v. Al Johnson’s Swedish Rest. & Butik, Inc.,795 F. App’x 822
, 823 (Fed. Cir. 2019); Australian III,965 F.3d at 1374
. The U.S. Patent and Trademark Office (“USPTO”) Trade- mark Trial and Appeal Board (the “TTAB”) has relied on this continuity. See, e.g., Seeley Int’l Pty. Ltd., No. 91246790,2020 WL 6306117
, at *2 n.18 (T.T.A.B. Oct. 26, 2020) (“Our decisions have previously analyzed the requirements of . . . 15 U.S.C. §§ 1063–64, under the rubric of ‘standing.’ We now refer to this inquiry as entitlement to a statutory cause of action. Despite the change in no- menclature, our prior decisions and those of the Federal Circuit interpreting [15 U.S.C. §§ 1063–64] remain appli- cable.”); Ethika, Inc., No. 9206368,2020 WL 6306141
, at *5
(T.T.A.B. Oct. 26, 2020) (“To establish entitlement to a
Case: 19-1567 Document: 65 Page: 8 Filed: 12/04/2020
6 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC
Whether we adopt Empresa Cubana’s or Corcamore’s
language, a petitioner needs a legitimate commercial inter-
est to have a valid cause of action under 15 U.S.C. § 1064
. Corcamore,2020 WL 6277728
, at *3; Empresa Cubana,753 F.3d at 1275
; see Lexmark, 572 U.S. at 131–32 (explaining that the “interests protected by the Lanham Act” are “com- mercial,” including “‘protect[ing] persons engaged in [com- merce within the control of Congress] against unfair competition’” (alterations in original) (quoting15 U.S.C. § 1127
)). 5 statutory cause of action under [15 U.S.C. § 1064
], such as a cause of action for likelihood of confusion, a plaintiff must demonstrate a real interest in the proceeding and a reason- able belief of damage.” (citing, inter alia, Australian III,965 F.3d at 1374
; Empresa Cubana,753 F.3d at 1275
)). Corcamore clarifies that Empresa Cubana and our pre- Lexmark case law are in keeping with Lexmark. See Cor- camore,2020 WL 6277728
, at *5 (“[W]e see no meaningful, substantive difference in the analysis used in Lexmark and Empresa Cubana.”). Corcamore cannot, however, be read to overrule Empresa Cubana or its reading of Lexmark. See Deckers Corp. v. United States,752 F.3d 949, 964
(Fed.
Cir. 2014) (“[A] panel of this court—which normally sits in
panels of three, and not en banc—is bound by the prece-
dential decisions of prior panels unless and until overruled
by an intervening Supreme Court or en banc decision.”).
5 The Supreme Court noted that “[i]dentifying the
interests protected by the Lanham Act . . . requires no
guesswork, since the [Lanham] Act includes an unusual,
and extraordinarily helpful, detailed statement of the stat-
ute’s purposes.” Lexmark, 572 U.S. at 131
(internal quota-
tion marks and citation omitted). Specifically:
The intent of [the Lanham Act] is to regulate com-
merce within the control of Congress by making ac-
tionable the deceptive and misleading use of marks
Case: 19-1567 Document: 65 Page: 9 Filed: 12/04/2020
AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 7
“In the usual case, where [a cancellation] is brought un-
der [15 U.S.C. § 1052
(d)], the [petitioner] ha[s] a proprie- tary interest in [the] mark [at issue], and standing is afforded through its assertion that it will incur some direct injury to its own established trade identity.” Jewelers Vig- ilance Comm., Inc. v. Ullenberg Corp.,823 F.2d 490, 493
(Fed. Cir. 1987) (discussing statutory standing to oppose, under15 U.S.C. § 1063
, registration of a mark) 6; see15 U.S.C. § 1052
(d) (providing that a mark may not be regis- tered “on the principal register” if it “so resembles a mark registered in the [USPTO], or a mark or trade name previ- ously used in the United States by another and not aban- doned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion”). However, a valid cause of action “can [also] be shown by establishing a direct commercial interest,” Cunningham v. Laser Golf Corp.,222 F.3d 943, 945
(Fed. Cir. 2000) (citing Int’l Order of Job’s Daughters v. Lindeburg & Co.,727 F.2d 1087
, 1092
in such commerce; to protect registered marks used
in such commerce from interference by State, or
territorial legislation; to protect persons engaged in
such commerce against unfair competition; to pre-
vent fraud and deception in such commerce by the
use of reproductions, copies, counterfeits, or color-
able imitations of registered marks; and to provide
rights and remedies stipulated by treaties and con-
ventions respecting trademarks, trade names, and
unfair competition entered into between the
United States and foreign nations.
15 U.S.C. § 1127
.
6 “The linguistic and functional similarities between
the opposition and cancellation provisions of [15 U.S.C. §§ 1063
, 1064] mandate that we construe the requirements of these provisions consistently.” Young v. AGB Corp.,152 F.3d 1377, 1380
(Fed. Cir. 1998). Case: 19-1567 Document: 65 Page: 10 Filed: 12/04/2020 8 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC (Fed. Cir. 1984)), such as the “longtime production and sale of merchandise with the [mark]” at issue, with “an equal right” to that of registrant-approved retailers “to use the [mark],” Job’s Daughters,727 F.2d at 1092
, or “own[er]s[hip]” and use of potentially similar “prior regis- trations,” Cunningham,222 F.3d at 945
.
Whatever commercial interest the petitioner asserts, it
must be “legitimate.” Empresa Cubana, 753 F.3d at 1275
; see Coach Servs., Inc. v. Triumph Learning LLC,668 F.3d 1356, 1376
(Fed. Cir. 2012) (requiring “a legitimate personal interest” (internal quotation marks and citation omitted)); Lipton Indus., Inc. v. Ralston Purina Co.,670 F.2d 1024, 1029
(C.C.P.A. 1982) (similar); cf. Lexmark, 572 U.S. at 131–32 (providing that the “interests protected by the Lanham Act” include “‘protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition’” (alterations in original) (quoting15 U.S.C. § 1127
)). Further, it must be rooted in “fact[]” and “affirma- tively proved.” Ritchie v. Simpson,170 F.3d 1092, 1099
(Fed. Cir. 1999) (citing Lipton,670 F.2d at 1028
); see Lip- ton,670 F.2d at 1029
(explaining that while “the legitimacy of the petitioner’s activity from which its interest arises will be presumed in the absence of evidence to the con- trary,” a party may “of course, seek to attack the legitimacy of [an] application or in some other way negate appellee’s interest”); cf. Lexmark,572 U.S. at 133
(“[A] plaintiff suing under [15 U.S.C.] § 1125(a) ordinarily must show economic or reputational injury[.]”). A petitioner may be deprived of a “legitimate commercial interest” under15 U.S.C. § 1064
if such interest is precluded by a prior judgment, see Em- presa Cubana, 753 F.3d at 1274–75 (explaining that a pe- titioner was not prevented from bringing cancellation proceedings before the TTAB because a relevant prior judg- ment “specifically did not address whether [the petitioner] could seek cancellation of the [registrations at issue]”), or a prior settlement agreement, see Danskin, Inc. v. Dan River, Inc.,498 F.2d 1386, 1387
(C.C.P.A. 1974) (concluding that Case: 19-1567 Document: 65 Page: 11 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 9 a petitioner could not, as a matter of law, seek cancellation of a mark because it had entered a prior settlement agree- ment with the registrant to “not oppose or petition to cancel directly or indirectly any registration” by that registrant); cf. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,528 U.S. 167, 192
(2000) (noting that “parties plainly lack a continuing interest” sufficient to sustain ju- risdiction “when the parties have settled”). This require- ment is meant to “prevent litigation where there is no real controversy between the parties, where a plaintiff, peti- tioner[,] or opposer, is no more than an intermeddler.” Jewelers,823 F.2d at 492
(quoting Lipton, 670 F.2d
at 1029–30).
II. Procedural History
Naked TM, LLC (“Naked”) and Australian Therapeutic
Supplies Pty. Ltd. (“Australian”) both sell condoms in the
United States. Australian Therapeutic Supplies Pty. Ltd.
(Australian II), No. 9205638, 2018 WL 6929683
, at *1 (T.T.A.B. Dec. 21, 2018). In April 2007, Naked and Aus- tralian entered into an “informal” settlement agreement under which Australian “agreed that it would not use or register the mark NAKED for condoms in the United States and that [Naked] could use and register the mark NAKED for condoms in the United States.”Id. at *6, *11
; seeid. at *9
(finding that Australian “did not want to have lawyers formalize a written agreement because [Austral- ian] did not want [Naked] to find out that [Australian] in- tended to circumvent their oral agreement and continue selling NAKED condoms in the United States via the In- ternet”). On October 30, 2007, Naked’s “application . . . for the mark NAKED [(typed drawing) for condoms] [was] reg- istered asRegistration No. 3325577
.”Id. at *7
. Almost five years later, on October 18, 2012, Australian, “filed a peti- tion to cancel” Naked’s registration of the NAKED mark before the TTAB, alleging “fraud, likelihood of confusion, and false suggestion of a connection” and asserting statu- tory standing based on Australian’s “prior use” and Case: 19-1567 Document: 65 Page: 12 Filed: 12/04/2020 10 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC attempted registration “of the mark NAKED and NAKED CONDOMS both for condoms” in the United States.Id. at *1
; seeid.
(noting that Australian subsequently “filed an
Amended Petition . . . adding the ground that [Naked] did
not possess the requisite bona fide intent to use the mark
NAKED when it filed the underlying application for the
registration at issue”); J.A. 37–44 (Petition), 52–63
(Amended Petition).
After discovery, Naked moved for “summary judgment
on its affirmative defenses of estoppel, laches, acquies-
cence, and unclean hands.” Australian Therapeutic Sup-
plies Pty. Ltd. (Australian I), No. 9205638, 2016 WL 1659338
, at *1 (Mar. 3, 2016). Australian “cross- moved for summary judgment on . . . likelihood of confu- sion under . . .15 U.S.C. § 1052
(d).”Id.
The TTAB con- cluded that there was a “likelihood of confusion and inevitable confusion” between the two NAKED marks,id.
at *6–7, and that, based on its finding of inevitable confu- sion, Naked’s “equitable defenses of laches, acquiescence, equitable estoppel, and unclean hands [were] not . . . appli- cable,”id. at *8
. The TTAB also found, however, that “gen- uine disputes of material fact exist[ed] regarding [Australian’s] [statutory] standing,” in particular “whether the parties’ previous communications and actions with re- spect to the use and registration of the mark NAKED re- sulted in an enforceable contract whereby [Australian] [wa]s precluded from using and registering the mark NAKED and challenging [Naked’s] use and registration of the NAKED mark,” and reserved those issues for trial.Id. at *5
. Following trial, the TTAB concluded that Australian had “failed to prove that it ha[d] [statutory] standing” un- der15 U.S.C. § 1064
, to petition for cancellation of Naked’s registration of the NAKED mark. Australian II,2018 WL 6929683
, at *1, *11. The TTAB found that Australian had previously entered a settlement agreement with Na- ked under which Australian had “agreed that it would not use or register the mark NAKED for condoms in the United Case: 19-1567 Document: 65 Page: 13 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 11 States and that [Naked] could use and register the mark NAKED for condoms in the United States.”Id. at *11
. It concluded that Australian, having “contracted away its right to use and register NAKED and by extension NAKED CONDOMS,” had “failed to prove that it has standing to cancel the [NAKED] registration.”Id.
On appeal, the Majority reversed and remanded. Aus- tralian III,965 F.3d at 1372
. The Majority concluded that “the [TTAB] erred when it determined that Australian must have proprietary rights” to petition for cancellation under15 U.S.C. § 1064
, and “that[,] based on the facts es- tablished before the [TTAB], Australian has a real interest in the cancellation proceeding and a reasonable belief of damage, thereby satisfying the statutory requirements to seek cancellation” under15 U.S.C. § 1064
.Id. at 1376
. The Majority explained that Australian had “demonstrate[d] a real interest in the proceeding because it twice filed an ap- plication to register its unregistered mark,”id. at 1375
, and had undertaken “advertising and sales in the United States” using the NAKED mark,id. at 1376
. I dissented. Australian III,965 F.3d at 1376
(Wallach, J. dissenting). While I agreed with the Majority that Australian was not required to prove a proprietary interest in the NAKED mark, I disagreed that the TTAB had required such a pro- prietary interest or that Australian had a valid cause of ac- tion against Naked.Id. at 1377
. Specifically, Australian had failed to show “a legitimate commercial interest,” and therefore any real interest and reasonable belief in dam- ages, in Naked’s registration.Id.
at 1378–79. While “[c]on- tracting away one’s rights to use a trademark” may not “preclude a petitioner from challenging” the registration of that mark before the TTAB, Australian III,965 F.3d at 1374
, seeking cancellation in breach of a settlement agreement, and pleading standing on the basis of addi- tional breaches of that settlement agreement, does pre- clude a petitioner from challenging that mark,id.
at 1378–
79 (Wallach, J. dissenting).
Case: 19-1567 Document: 65 Page: 14 Filed: 12/04/2020
12 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC
Naked petitioned for rehearing en banc. See Appellee’s
Petition. Australian, at the court’s request, filed a re-
sponse. See Appellant’s Resp. An amicus also filed a brief,
arguing that we should use this case to clarify our 15 U.S.C. § 1064
cause of action jurisprudence—in particular,
how Lexmark impacts our statutory standing analysis,
and, if necessary, overrule Empresa Cubana. See Amicus
Br. 2–3.
DISCUSSION
Australian III concluded that “the [TTAB] erred when
it determined that Australian must have proprietary
rights” to petition for cancellation under § 1064, and
“that[,] based on the facts established before the [TTAB],
Australian has a real interest in the cancellation proceed-
ing and a reasonable belief of damage, thereby satisfying
the statutory requirements to seek cancellation” under 15 U.S.C. § 1064
. Australian III,965 F.3d at 1376
. Because Australian III: (1) is in direct conflict with our case law requiring a “legitimate commercial interest” for a valid cause of action under15 U.S.C. § 1064
; (2) undermines our
case law favoring the enforcement of settlement agree-
ments; and (3) raises questions as to the impact of Supreme
Court precedent on our statutory cause of action jurispru-
dence, I respectfully dissent from our denial of rehearing
en banc.
I. Australian III is Contrary to Our Case Law Requiring
a Legitimate Commercial Interest
Australian III is contrary to our case law requiring that
petitioners have a “legitimate commercial interest” to “sat-
isfy the requirements for bringing cancellation proceed-
ing[s].” Empresa Cubana, 753 F.3d at 1275
; see Lexmark,572 U.S. at 131
. Before the TTAB, Australian petitioned for cancellation of Naked’s registration of the NAKED mark based on likelihood of confusion with its “prior use of the mark NAKED.” Australian II,2018 WL 6929683
, at *1; see Appellant’s Br. 22 (“[Australian] Case: 19-1567 Document: 65 Page: 15 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 13 has a direct commercial interest in this proceeding as a re- sult of its prior and continuing use of the NAKED [and NAKED CONDOMS] [m]arks in the advertising, market- ing, and the offering for sale of condoms on its websites.”); J.A. 59 (Amended Petition to Cancel) (similar). It offered evidence that it has advertised and sold condoms under the NAKED mark in the United States through its websites since at least April 2003. Australian II,2018 WL 6929683
, at *5; see, e.g., J.A. 106, 168–70. It also offered evidence that it had applied for registration of the NAKED mark twice, first in 2003, U.S. Application Serial No. 78,758,237 (“the ’237 application”), which it subsequently abandoned, Australian II,2018 WL 6929683
, at *8, and second, in No- vember 2012, after it had filed its petition for cancellation in this case—U.S. Application No. 85,772,589 (“the ’589 application”), J.A. 44, 1091. Based on these prior uses and attempted registrations, Australian III concludes that Aus- tralian has a valid cause action to challenge Naked’s regis- tration of the NAKED mark under15 U.S.C. § 1064
.
Australian III, 965 F.3d at 1375–76.
However, the record also showed that, in 2007, Austral-
ian and Naked entered into a settlement agreement. Aus-
tralian II, 2018 WL 6929683
, at *11. Australian agreed not to register the NAKED mark in the United States, not to use the NAKED mark in the United States, and not to chal- lenge Naked’s use and registration of the NAKED mark in the United States. Australian II,2018 WL 6929683
, at *6– 9, *11 (finding that Australian had “agreed that it would not use or register the mark NAKED for condoms in the United States and that [Naked] could use and register the mark NAKED for condoms in the United States”); see J.A. 1541 (Australian’s Managing Director and Co-Owner conceding that he had agreed “to [Naked’s] use and regis- tration of the trademark [NAKED] in the United States”), 1556 (Australian’s Managing Director and Co-Owner testi- fying that “I understood that we had a gentleman’s agree- ment to coexist in the marketplace”). That is, Australian’s Case: 19-1567 Document: 65 Page: 16 Filed: 12/04/2020 14 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC petition for cancellation of the NAKED mark and its prof- fered bases for its cause of action were either superseded by or in breach of its settlement agreement with Naked. Australian II,2018 WL 6929683
, at *11; J.A. 1565 (Aus- tralian’s Managing Director and Co-Owner stating that Australian abandoned the ’237 application based on its “ne- gotiations” with Naked). 7 Australian, therefore, having used and attempted to register the NAKED mark in breach of a settlement agreement and having sought cancellation in breach of that same settlement agreement, lacked a valid cause of action against Naked for registration of that mark. See Danskin,498 F.2d at 1387
; see also Job’s Daugh- ters,727 F.2d at 1092
(finding a legitimate commercial in-
terest in the “longtime production and sale of merchandise
with the [mark]” at issue, with “an equal right [to] that of
[registrant-approved retailers] to use the [mark]” (empha-
sis added)).
Australian III, by finding a valid cause of action in
breach of a settlement agreement, is contrary to our case
law requiring a petitioner have a “legitimate commercial
interest” under 15 U.S.C. § 1064
. Empresa Cubana,753 F.3d at 1275
; see15 U.S.C. § 1127
(providing that the Lan- ham Act “mak[es] actionable the deceptive and misleading use of marks in . . . commerce”); Lexmark,572 U.S. at 131
(explaining that the Lanham Act’s zone of interests ex- tends to “‘protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition’” (alterations in original) (quoting15 U.S.C. § 1127
)).
7 The TTAB also found that this breach was inten-
tional. See Australian II, 2018 WL 6929683
, at *9 (finding that “[Australian] did not want to have lawyers formalize a written agreement because [Australian] did not want [Naked] to find out that [Australian] intended to circum- vent their oral agreement and continue selling NAKED condoms in the United States via the Internet”). Case: 19-1567 Document: 65 Page: 17 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 15 Accordingly, rehearing en banc is necessary “to secure the uniformity of [our] decisions.” FED. R. APP. P. 35(a)(1); see Deckers,752 F.3d at 956
(“The courts thus abide by the the-
ory of stare decisis to promote these twin pillars of juris-
prudence: predictability and stability.”).
II. Australian III is Contrary to Our Case Law
Favoring the Enforcement of Settlement Agreements
Australian III is contrary our case law favoring en-
forcement of settlement agreements. See, e.g., Hemstreet v.
Spiegel, Inc., 851 F.2d 348, 350
(Fed. Cir. 1988) (“The law
strongly favors settlement of litigation, and there is a com-
pelling public interest and policy in upholding and enforc-
ing settlement agreements voluntarily entered into.”).
Australian III alludes to the TTAB’s conclusion that Aus-
tralian and Naked had entered into a prior settlement
agreement. Australian III, 965 F.3d at 1373–74. It does
not, however, meaningfully address these findings. Id.
at 1374 (stating that “[w]hile an agreement could ulti-
mately bar Australian from proving actual damage, [15
U.S.C.] § 1064 requires only a belief of damage”).
Following summary judgment, the question before the
TTAB was whether Australian and Naked had a settle-
ment agreement that precluded Australian from having a
valid cause of action. Australian I, 2016 WL 1659338
, at *3. The TTAB found that such a settlement agreement did exist—specifically, that Australian had entered into a settlement agreement with Naked under which Australian had “agreed that it would not use or register the mark NAKED for condoms in the United States and that [Naked] could use and register the mark NAKED for condoms in the United States.” Australian II,2018 WL 6929683
, at *11. On appeal, Australian did not substantively challenge this Case: 19-1567 Document: 65 Page: 18 Filed: 12/04/2020 16 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC finding, 8 and Australian III does not conclude that this finding was unsupported by substantial evidence, see gen- erally Australian III, 965 F.3d at 1372–73, 1375–76; see also Zheng Cai v. Diamond Hong, Inc.,901 F.3d 1367, 1371
(Fed. Cir. 2018) (“We review the TTAB’s . . . findings of fact for substantial evidence.” (citation omitted)), or that the TTAB misread the settlement terms, see generally Austral- ian III, 965 F.3d at 1372–73, 1375–76; see also McCall v. U.S. Postal Serv.,839 F.2d 664, 669
(Fed. Cir. 1988) (“[T]he interpretation of [settlement agreement terms] is a ques- tion of law.”). Rather, without comment or analysis, Aus- tralian III recharacterizes the settlement agreement, and the parties’ conduct in response to that agreement. Com- pare Australian III,965 F.3d at 1373
, with Australian II,2018 WL 6929683
, at *6–9, *11.
Australian III states both that the TTAB found “Aus-
tralian [had] agreed it would not use or register its unreg-
istered [NAKED] mark in the United States and . . . Naked
could use and register its NAKED mark in the United
8 Australian asserted, in passing, that “it did not”
“contract[] away its proprietary rights.” Appellant’s Br. 19;
see id. at 8
(characterizing, in its statement of the facts, the parties’ communications as unsuccessful settlement nego- tiations). Even if this is construed as argument, Australian failed to develop the point. The argument is, therefore, waived. In re Baxter Int’l, Inc.,678 F.3d 1357, 1362
(Fed. Cir. 2012) (providing that arguments raised only in the “background of [an] opening brief” are waived); SmithKline Beecham Corp. v. Apotex Corp.,439 F.3d 1312, 1320
(Fed. Cir. 2006) (providing that “mere statements of disagree- ment with the [lower tribunal] as to the existence of factual disputes do not amount to a developed argument” and that “a passing reference to an issue . . . will not suffice to bring that issue before this court” (internal quotation marks and citations omitted)). Case: 19-1567 Document: 65 Page: 19 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 17 States,” and that the TTAB “made no finding” that “Aus- tralian [had] agreed not to challenge Naked’s use and reg- istration of the NAKED mark.” Australian III,965 F.3d at 1373
. First, I understand this to be internally contradic- tory. Australian agreed to Naked’s registration of the NAKED mark. Australian II,2018 WL 6929683
, at *11. A petition for cancellation is contrary to that agreement be- cause it seeks to “cancel [the] registration of [Naked’s] mark.”15 U.S.C. § 1064
. Second, it is also incorrect. The TTAB stated that Australian’s “standing is intrinsically connected with the question of whether the parties have an enforceable agreement that precludes [Australian] from using or registering the mark NAKED or NAKED CONDOMS and from challenging [Naked’s] use and regis- tration of the NAKED mark,” and concluded that there was such an agreement. Australian II,2018 WL 6929683
, at *11; seeid.
(“[W]e find that [Australian] agreed that it would not use or register the mark NAKED for condoms in the United States and that [Naked] could use and register the mark NAKED for condoms in the United States. In view thereof, [Australian] failed to prove that it has stand- ing to cancel the registration[.]”). Last, even if Australian’s petition itself is not precluded by the settlement agree- ment, Australian’s alleged bases for its statutory standing remain either pre-empted by or in violation of its settle- ment agreement with Naked. Compare Australian III,965 F.3d at 1373
(“Australian agreed it would not use or regis- ter its unregistered [NAKED] mark in the United States”), withid.
at 1375–76 (concluding that Australian had
“demonstrate[d] a real interest and reasonable belief of
damage” based on its attempts to use and register the
NAKED mark).
Having narrowed Australian’s settlement agreement
obligations, Australian III relies on Selva & Sons, Inc. v.
Nina Footwear, Inc., 705 F.2d 1316
(Fed. Cir. 1983), for the proposition “that contracting away one’s rights to use a trademark does not preclude challenging a mark before the Case: 19-1567 Document: 65 Page: 20 Filed: 12/04/2020 18 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC [TTAB].” Australian III,965 F.3d at 1374
(citing Selva,705 F.2d at 1325
). This reliance is misplaced. In Selva, we held that the TTAB erred by “[r]efus[ing] to pass” on the issue of contractual estoppel. Selva, 705 F.2d at 1323–24 (capitalization normalized). We separately held that, while the TTAB had not directly addressed the issue, it had nonetheless erred by requiring “proof of dam- age” for standing,id. at 1325
, when it concluded that the petitioner could not be injured because it “already ha[d] an existing,” substantially similar “registration” to that it sought to cancel,id. at 1321
. We did not reach whether a settlement agreement could preclude statutory standing. Seeid. at 1324
(remanding to the TTAB to consider “the
agreement, its construction, [and] its validity if necessary
to decide the issues properly before it in this cancellation
proceeding, including the issue of estoppel”).
“[I]t is well-established” that a settlement agreement
made in absence of a writing is nonetheless “binding on the
parties, particularly whe[re],” as here, “the terms are me-
morialized into the record.” Tiburzi v. Dep’t of Justice, 269 F.3d 1346, 1351
(Fed. Cir. 2001); see Australian II,2018 WL 6929683
, at *6–9, *11. Australian III, in concluding that Australian has a valid cause of action against Naked— that is, in concluding Australian has a legitimate commer- cial interest in the NAKED mark as demonstrated by its using and registering that mark in breach of a settlement agreement, as well as a valid cause of action against Naked despite having brought that action in breach of that same settlement agreement, compare Australian III, 965 F.3d at 1375–76, with Australian II,2018 WL 6929683
, at *6–9, *11—is contrary to our case law enforcing settlement agreements against would-be trademark opposers and challengers, see Wells Cargo,606 F.2d at 965
; cf. Flex-Foot, Inc. v. CRP, Inc.,238 F.3d 1362, 1368
(Fed. Cir. 2001) (ex- plaining that a “promise by the licensee not to challenge the validity of [a] patent . . . implicates the important pol- icy of enforcing settlement agreements and res judicata”). Case: 19-1567 Document: 65 Page: 21 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 19 “To permit [Australian] thus to escape its obligation under the settlement w[ill] seriously decrease the willingness of parties to settle litigation on mutually agreeable terms and thus weaken the efficacy of settlements generally.” Hem- street,851 F.2d at 350
; see Jewelers,823 F.2d at 492
(noting that statutory standing requirements “prevent litigation where there is no real controversy between the parties, where a plaintiff, petitioner[,] or opposer, is no more than an intermeddler”); see also Gould v. Control Laser Corp.,866 F.2d 1391, 1392
(Fed. Cir. 1989) (“Settlement moots an action[.]”). Accordingly, rehearing en banc is necessary here “to secure the uniformity of [our] decisions” favoring enforcement of settlement agreements. FED. R. APP. P. 35(a)(1); see Hubbard v. United States,514 U.S. 695, 714
(1995) (“Stare decisis has special force when . . . citizens
have acted in reliance on a previous decision, for in this
instance overruling the decision would dislodge settled
rights and expectations[.]” (internal quotation marks and
citation omitted)).
III. Australian III Raises Questions as to the Impact of
Supreme Court Precedent on Our Statutory Cause of
Action Jurisprudence
Australian III raises questions as to whether a party
must have a valid cause of action at the time of filing.
While we recently held that “[t]he Lexmark analytical
framework is the applicable standard for determining
whether a person is eligible under [15 U.S.C.] § 1064 to
bring a petition for the cancellation of a trademark regis-
tration,” Corcamore, 2020 WL 6277728
, at *3, we have not resolved what impact Lexmark’s statement that statutory standing does not implicate subject matter jurisdiction has on when a petitioner must have a statutory cause of action, Lexmark,572 U.S. at 128
n.4.
Australian III concludes that Australian’s ’589 applica-
tion, which post-dates Australian’s petition for cancella-
tion, confers statutory standing on Australian.
Case: 19-1567 Document: 65 Page: 22 Filed: 12/04/2020
20 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC
See Australian III, 965 F.3d at 1375
(noting that the ’589 application was made “post filing” of its petition to cancel Naked’s registration of the NAKED mark and concluding that Australian has a valid cause of action to challenge Na- ked’s registration of the NAKED mark “because the USPTO refused registration of . . . [the] ’589 application[] based on a likelihood of confusion with Naked’s registered mark” without addressing its “post filing” status). There may be an argument that use of a “post filing” application is sufficient, under Lexmark, to establish a statutory cause of action. See Lexmark,572 U.S. at 128
n.4 (noting that statutory standing does not implicate an Article III court’s subject matter jurisdiction); Troy v. Samson Mfg. Corp.,758 F.3d 1322, 1326
(Fed. Cir. 2014) (“[T]he issues decided by the higher court need not be identical to be controlling. Rather, the relevant court of last resort must have under- cut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irrecon- cilable.” (internal quotation marks and citation omitted)). We have not, however, held that to be the law. Instead, our current jurisprudence suggests the opposite. Generally, “a party may not vindicate rights in court before the party ac- tually possesses the rights.” Alps S., LLC v. Ohio Willow Wood Co.,787 F.3d 1379, 1384
(Fed. Cir. 2015). A peti- tioner must still plead and prove statutory standing as a “threshold inquiry.” Lipton,670 F.2d at 1028
. Trademark infringement claims require statutory standing at the time of filing. Gaia Techs., Inc. v. Reconversion Techs., Inc.,93 F.3d 774, 777
(Fed. Cir.), amended on reh’g in part,104 F.3d 1296
(Fed. Cir. 1996) (explaining that “[i]f [the plain- tiff] can prove that it was the assignee of the [relevant trademark] at the time the suit was filed, [the plaintiff] has [statutory] standing to sue for . . . for trademark infringe- ment under 15 U.S.C. § 1114”). Similarly, “nunc pro tunc assignments” remain “[in]sufficient to confer retroactive [statutory] standing” under35 U.S.C. § 281
. Enzo APA & Son, Inc. v. Geapag A.G.,134 F.3d 1090, 1093
(Fed. Cir. 1998); see Schwendimann v. Arkwright Advanced Case: 19-1567 Document: 65 Page: 23 Filed: 12/04/2020 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC 21 Coating, Inc.,959 F.3d 1065
, 1072 (Fed. Cir. 2020) (follow- ing Lexmark, holding that our35 U.S.C. § 281
statutory
cause of action analysis requires consideration of “whether
[the plaintiff] was a patentee at the time her action was
filed”).
The TTAB did not address the ’589 application (or
Lexmark) in its decision. See generally Australian II, 2018 WL 6929683
, at *1–11. Before the panel, Naked asserted that Australian’s post-filing ’589 application could not es- tablish statutory standing. Appellee’s Br. 24–26. Austral- ian III does not address this timing argument and, by accepting the ’589 application as evidence of statutory standing without comment, appears to extend Lexmark sub silentio. See Australian III,965 F.3d at 1375
. We “do[] not normally overturn, or so dramatically limit, earlier author- ity sub silentio.” Shalala v. Illinois Council on Long Term Care, Inc.,529 U.S. 1, 18
(2000); see In re Morris,127 F.3d 1048, 1054
(Fed. Cir. 1997) (rejecting “appellants’ invita-
tion to construe . . . the cases cited by appellants so as to
overrule, sub silentio, decades old case law”). En banc re-
view is necessary to either conform Australian III to our
case law or resolve the uncertainties introduced by
Lexmark. See FED. R. APP. P. 35(a)(1)–(2).
CONCLUSION
Australian lacks a legitimate commercial interest in
the NAKED mark and, therefore, a valid cause of action
against Naked. Empresa Cubana, 753 F.3d at 1275
; see Lexmark,572 U.S. at 131
. There is “no real controversy between the parties”—they resolved any such controversy between themselves through settlement in 2007—leaving Australian “no more than an intermeddler” in the instant action. Coach Servs.,668 F.3d at 1376
(internal quotation marks and citation omitted); cf. Gould,866 F.2d at 1392
(“When the case between the parties has been settled, there is no actual matter in controversy essential to the decision of the particular case[.]”). En banc action is necessary to Case: 19-1567 Document: 65 Page: 24 Filed: 12/04/2020 22 AUSTRALIAN THERAPEUTIC v. NAKED TM, LLC maintain the uniformity our decisions and clarify the im- pact of Lexmark on those decisions. See FED. R. APP. P. 35(a)(1)–(2). Accordingly, I respectfully dissent from our denial of rehearing en banc.